Tax Administration Reforms and Turnover Tax Compliance among SMEs in Kitale Town, Kenya

Abstract

Kenya Revenue Authority has introduced several reforms to enhance turnover tax compliance among SMEs and reduce the need for assistance from tax practitioners. Despite these efforts to support micro-enterprises, uptake remains low. This study examined the effect of tax administration reforms on turnover tax compliance among SMEs in Kitale Town, Kenya. A quantitative research approach was adopted. Data were collected from 271 SME owners/managers using structured, closed-ended questionnaires. Participants were selected through stratified proportionate random sampling. Data collection took place over nine months, from July 2025 to March 2026. Ordinary least squares linear regression was used to evaluate the relationships among the variables and test the hypothesised model, with all statistical analyses conducted using IBM SPSS Statistics. The findings indicated that integrated tax system reforms, alternative dispute resolution mechanisms, and enhanced customer care were positive drivers of turnover tax compliance among SMEs. Based on these findings, the Kenya Revenue Authority should pursue targeted administrative reforms that simplify tax systems. In particular, digital platforms should be redesigned to reduce technological complexity for users and administrative burdens during filing. Streamlining user interfaces and reporting workflows may reduce compliance costs for SMEs and foster a more collaborative tax environment.